LERØY SEAFOOD GROUP FIRST QUARTER 2020
Correction on slide 13 in the Q1 presentation, no other changes.
In Q1 2020, Lerøy
- “In the first quarter of 2020, earnings for the Farming segment and Wild Catch segment were up from Q1 2019, while earnings for the VAPS&D segment were down,” explains CEO
Henning Beltestad . He goes on to say: “The Covid-19 pandemic started to have an impact on operations in the first quarter, worsening throughout the first quarter and into the second quarter. I am very proud of the Group's employees, who have found constructive solutions and displayed a wonderful determination, working extremely hard to keep the Group's value chain open and ensure deliveries to our customers.”
The Group’s associates play an important role, and reported a loss of
The Group’s profit before tax and fair value adjustment related to biological assets was
This constitutes earnings per share before fair value adjustment related to biological assets of
At
THE WILD CATCH SEGMENT
The wholly owned subsidiary Lerøy Havfisk’s primary business is wild catches of whitefish. Lerøy Havfisk’s total catch volume in Q1 2020 was 25,009 tonnes, compared with 20,536 tonnes in Q1 2019. Catch volumes for the main species in Q1 2020 were 12,530 tonnes of cod, 5,198 tonnes of haddock and 3,602 tonnes of saithe. The catch distribution in Q1 2019 was 8,881 tonnes of cod, 5,246 tonnes of haddock and 3,214 tonnes of saithe. The value of fish on inventory for Lerøy Havfisk increased by
LNWS’s primary business is processing wild-caught whitefish. The company has use of 12 processing and purchasing plants in
In total, the segment contributed EBIT of
- “In the Wild Catch segment, good catch efficiency, increased volume and higher prices have resulted in good earnings for the trawler fleet in the first quarter,” confirms CEO
Henning Beltestad . “The new trawler, ‘Kongsfjord’, delivered in February this year, has already proven its high catch efficiency, and we are particularly pleased to note the apparent success of our investments made to improve catch quality,” says Henning Beltestad. “The high prices for raw materials in the quarter remain a challenge for earnings from onshore operations, but we have witnessed how the investments we have made in recent years have generated significant improvements in the Group's product range and position on global seafood markets,” confirms CEOHenning Beltestad .
THE FARMING SEGMENT
The Farming segment reported operating profit before fair value adjustment related to biological assets of
In Q1 2020, EBIT/kg was
- “At the start of the first quarter, the spot prices for salmon were high. These fell during the quarter, partly due to the impact on demand relating to the restrictions laid down to control the Covid-19 pandemic. What's more, prices realised were negatively affected by an abnormal high shar of winter ulcers on fish,” explains CEO
Henning Beltestad . - “The Group reported higher release from stock costs in Q1 2020 when compared with the same period last year, but expects to see a fall in these costs in the second half of 2020,” confirms Henning Beltestad.
THE VAP, SALES & DISTRIBUTION SEGMENT (VAPS&D)
The VAPS&D segment reported revenue in Q1 2020 of
“Throughout the first quarter of 2020, the seafood markets were increasingly affected by the Covid-19 pandemic. This was initially evident in the markets in
MARKET AND OUTLOOK
Price developments for
Currently, the Group’s production of red fish takes place mainly in
Capacity for flexibility and change is also important for global salmon production. Lerøy is developing its existing business by investing in knowledge and facilities to ensure competitive strengths. Irrespective of the above, the Group constantly seeks new knowledge and expertise within both onshore and offshore salmon production.
The Group has invested heavily in larger smolt in recent years. With time, the new facilities will increase the average smolt size for the Group. For Lerøy Aurora and Lerøy Sjøtroll, the average size of released salmon smolt will be around 300 grams in 2020. Both the corporate management and the Board of Directors expect the completed investments in new smolt plants, and the ongoing investments, to provide considerable growth in production in the sea in 2020 and the years to come. From 2020 onwards, this increase in production will gradually result in higher harvest volumes every year over the next four to five years. The estimated harvest volume for 2020, including the share from associates, is currently 183,000-188,000 tonnes salmon and trout. The Group’s target is for the corresponding figures in 2021 to be between 200,000 and 210,000 tonnes.
The Group has made substantial investments in whitefish in recent years. One new vessel was added to the fleet in 2018 – Nordtind – and another in early 2020 – Kongsfjord.
Things have remained challenging for the onshore industry at the start of 2020, although with some signs of improvements since 2019. The industry is subject to extremely strong seasonal fluctuations, and Lerøy is of the opinion that profitability for the industry will depend on innovation and opportunities for specialisation. Unfortunately, the Norwegian Storting has not taken the company’s input into account in its resolution of
Lerøy works to develop an efficient and sustainable value chain for seafood. This not only provides cost-efficient solutions, but also quality, availability, a high level of service, traceability, and competitive climate-related and environmental solutions. At the start of 2020, the corporate management and Board of Directors are confident that Lerøy has a good starting point for continued profitable growth and development of Group operations.
The Group’s products are healthy and good, and production is financially, climate and environmentally sustainable. The Board of Directors therefore expects to see good underlying increase in demand in the years to come. It is not possible for the management or Board of Directors to assess how long the Covid-19 pandemic will last, but we are confident in assuming that demand will with time return to historic levels and continue to develop from there. At present time there are signs the “HoReCa”-market is gradually reopening. The Board of Directors emphasises that the outlook is subject to much greater uncertainty than normal, but current estimates are for earnings in Q2 2020 to be significantly lower than would normally be expected. For the year 2020 in total the Board of Directors emphasis that the Group’s earnings will be dependent on the length of restriction related to Covid-19.
Questions and comments may be addressed to the company’s CEO,
This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act
Attachments
- Report Q1 2020
- Q1 2020 Presentation
© OMX, source